Co-operatives, DAOs and Collectives. How can these models be applied to organisations?

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Pete Cohen, development partner at FORWARD — The RMIT Centre for Future Skills and Workforce Transformation — writing with director Peter Thomas and development partners Sally McNamara, Inder Singh, Kate Spencer, Courtney Guilliatt, Daniel Bluzer-Fry, Helen Babb-Delia and Soolin Barclay on how co-operatives, DAOs and collective organisational models can be applied.

As we explore the networked nature of the future of work here at RMIT FORWARD, one area where we are deepening our work is how the concepts of co-operatives and distributed autonomous organisations (DAOs) can be applied to collectives of people who would have otherwise organised themselves as employees of a typical company.

The potential of these alternative models is enormous and inspiring. By enabling collective ownership, incentive structures are completely different to a traditional organisation and are more likely to promote alignment, plus a focus on value creation and efficiency. When everybody has skin in the game, all of the upside and downside risk is shared.

Establishing a business using these models presents several questions and challenges. Some of these stem from structural concerns — legal frameworks, contractual terms, insurance etc — while others stem from cultural factors — how shared values are established and upheld or how governance is handled.

We have identified several people in the RMIT FORWARD ecosystem who have a direct interest in these topics, either as a founder who is considering transitioning their business to one of these models or as an advisor seeking to help people and organisations navigate the path.

To get our collective questions and insights out on the table, we are hosting a series of dialogue sessions on the topic. These are focussed, small group conversations, which we will undertake with the intention to share with the FORWARD community — whether that be through full-length recordings, articles, or synthesised insights.

The first of these sessions was on 10 February 2023. The participants included:

• Jason Hardie CEO and co-founder of The Digital Village.
• Inder Singh Chief Talent Officer and a co-founder of ConsultXperts (and RMIT FORWARD Development Partner).
• Antony McMullen Co-founder of Co-operative Bonds and 888 Co-operative Causeway (and RMIT FORWARD Fellow).
• Pete Cohen (discussion moderator) RMIT FORWARD Development Partner, founder of Collaborate and Deliver and innovation consultant at Vibrance Partners.

Each participant is actively exploring these models for ventures that they are involved in, so this session was an opportunity to directly share questions, learnings and insights.

Some of the key takeaways included:

1. Compliance with tax and labour laws is one of the biggest challenges DAOs face. However, the adoption of co-op models presents a means of circumnavigating that challenge, especially in Australia where there is a sophisticated and national legislation that caters for many of the needs of a member based organisation such as a DAO.
2. Governance and decision rights One member, one vote versus token-based approaches have different dynamics and tradeoffs. Designing governance that is both fair and democratic is not without its challenges. There is a reasonable argument that people who invest early in building an initiative should receive a higher stake and have more influence over its direction than someone who arrives later to the party. However, distributing voting rights unevenly amongst members allows for certain interests to be prioritised by those who hold that power.
3. The big questions What is the end game of the organisation? What is the community working towards? What is the purpose of the company? How do people benefit? What’s in it for them? These kinds of questions are fundamental and should inform the organisation's design and governance model. Of course, this can become challenging as things evolve over time, with new people coming into the the organisation and the objectives potentially changing.
4. Market facing and commercial concerns Ultimately, the business needs to remain viable at each stage of its evolution. So these organisational design levers must be considered through that lens. It is made more complex in that there are two simultaneous sets of value propositions that need to be optimised — for the members and also for the customers of the business. Striking this balance is one of the unique challenges that come with designing and running a two sided business model. However, as Antony shared during the discussion, in a member based organisation, when the ultimate mission is for the benefit of the members, this can actually present a more straightforward decision making framework than in a typical commercial organisation where there is a conflict of interest between shareholders seeking profit maximisation and customers or members seeking the best value or experience.

We welcome further questions and insights from anyone interested in this topic — please comment on the article or reach out to Pete Cohen — pete.cohen@rmit.edu.au

Stay tuned as we continue to share our learnings from future dialogue sessions and explorations on this topic.

FORWARD is the RMIT Centre for Future Skills and Workforce Transformation.

Our role is to build an innovative learning ecosystem at scale, create new collaborative applied research and invent next-generation skills solutions that will catalyse workforce development in the future-oriented industries crucial to Victoria’s economic renewal.

We lead collaborative applied research on future skills and workforce transformation from within RMIT’s College of Vocational Education, building and scaling the evidence and practice base to support Victorian workforce planning and delivery and acting as a test lab for future skills to develop and pilot new approaches to skills training and education through digital transformation and pedagogical innovation.

We leverage RMIT’s multi-sector advantage to translate research insights into identifying workforce requirements and the co-design of practice-based approaches with industry.

Contact us at forward@rmit.edu.au